Gold! What’s it Good for When the “Economy Goes Full-on Mad Max?”
Via The Atlantic: Why Gold Would Be Useless in an Economic Apocalypse
when an economy goes full-on Mad Max and we’re all reduced to bartering, the survivors are going to be more interested in useful goods than in a soft metal useful mostly for ornamental purposes. Part of gold’s value as a commodity is derived from the fact that it can easily be traded across borders. But if that were no longer an option, and you were reduced to using bullion to buy a baguette, it wouldn’t really matter what people in China or India were willing to pay for your gold.
I would also add that, in a truly Hobbesian state of nature, it might not be wise to keep all your wealth stored in a small, easily pilfered box.
Really, this is a more colorful way of noting that gold has value for the same reason the dollars, euros, and other stores of values do: because we collectively say so. Sure, the reasons vary as to why we assign value to something, but it still boils down to us and not to some magic.
Now, what if it isn’t Mad Max meets Hobbes and just the dollar collapses?
Now, in fairness to the goldbugs out there, I think Marotta is oversimplifying a bit. Let’s say the United States has a bout of Zimbabwe-like inflation, but the international commodities markets stay up and running. Theoretically, if the collapse of the world’s reserve currency hasn’t shocked the entire global economy into paralysis, you might be able to trade your gold for Euros or Swiss Francs or whatever else the markets start denominating prices in and start a nice little import business.
The problem is that if doomsday doesn’t arrive, you’re probably stuck with a bum investment.
Here’s what I want to know: what are the odds that the dollar would collapse into Zimbabwe-like territory, but somehow the euro and franc holds value? This strikes me as unlikely, to put it mildly.